Private Colleges Propose Tuition Reduction Strategy

What if America’s private colleges could stop their annual increases in tuition or even drop their prices down?

The National Association of Independent Colleges and Universities (NAICU) has an idea it says would do just that.

NAICU has recommended that Congress give private, nonprofit colleges a temporary anti-trust exemption for the purposes of promoting affordability.

Current laws ban discussion about prices and discounts — including student aid — among competitors in any industry. NAICU says that this has led to a vicious cycle of ongoing tuition inflation and has forced private colleges to offer larger and larger discounts on the sticker price to stay competitive.

They believe that if schools could talk to one another, they could end this cycle and start targeting financial aid to the students who need it most. The thinking is that if everyone made the decision to collectively lower tuition, then no college would feel like it “lost” because it wasn’t offering the huge discounts that are currently available to counter price inflation.

“It seems trite to talk about the arms race, but that’s what this is,” John McCardell Jr., vice chancellor at Sewanee: The University of the South told The Hechinger Report. “What we need is a summit meeting. What we need is an arms control meeting. The alternative is mutually assured destruction.”

This idea isn’t actually new. Until the early 1990s, colleges routinely discussed cost and how much financial aid to offer students.

About 24 groups made up of 150 colleges used to meet to compare costs, the Institute for College Access and Success reports. But the practice was abandoned in 1991 when the US Department of Justice brought charges of price-fixing against the Ivy Overlap Group, a group of private institutions that included Ivy League schools and Massachusetts Institute of Technology.

F.M. Scherer, an emeritus professor of public policy at Harvard, has doubts that starting the practice back up again would actually bring costs down.

“It’s just possible that collusion in tuition-setting could be reflected on the cost side by an above-average increase” in the price, Scherer told The Hechinger Report. “If you relaxed the pressure even more, where would it go? To a general reduction of tuition or to higher educational spending generally on the facilities and staff side? I, frankly, am skeptical.”

Ashley Dobson is NACAC’s communications manager for content and social media. You can reach her at adobson@nacacnet.org.